Scotia Group Jamaica Limited will distribute life insurance products on behalf of Sagicor Group Jamaica’s insurance arm, for which it will earn fees, once the sale of its life insurance business is concluded.
The No. 2 banking group will set up a new insurance sales unit that will offer advisory services to clients in its branches, under its own brand. It will continue to pitch ScotiaMint and retirement product ScotiaBridge through this unit, but will also sell other Sagicor Life Jamaica’s products, under an arrangement that will run for 20 years.
“The benefits to Scotia is that we can deliver additional products and services to our insurance clients and Sagicor benefits from the increased distribution from Scotia branch networks,” said Scotia Group president and CEO David Noel in a briefing on Friday. “The arrangement will allow for compensation to Scotia for distributing Sagicor products. And Sagicor will benefit from administering and underwriting these products,” he said.
Scotia Group earned $3.8 billion in net profit on $5 billion in revenues from insurance services for the year ending October 2018. The segment offered the best return on assets within the group at some 6.3 per cent, followed by the investment banking arm at 4.8 per cent.
However, the banking group is in the process of repositioning to concentrate more fully on its core operation, which includes the pending sale of Scotia Jamaica Life Insurance Limited to Sagicor – a US$144- million deal that is expected to close in 2019 or 2020.
The strategy sees Scotia shifting from underwriting and administering its insurance services to a model which focuses on distribution of an even larger suite of services, Noel said.
“This partnership allows us to meet the needs of our customers,” he said. “Instead of that adviser being from Scotia Jamaica Life Insurance Company, it will be from the new Scotia sales entity created. They will provide the same services in addition to wider products and services underwritten by Sagicor.”
Scotia Group is focused on growing its banking operation, which includes investments in digital technology, branches and its automated banking network. On the cost containment side of the spectrum, the Jamaica’s No. 2 bank is outsourcing some services to other markets where the Canadian-owned banking network has set up so-called centres of excellence for shared services.
Scotia Group recorded a soft fourth quarter but still managed to make $12.8 billion over 12 months to October 2018, or 2.6 per cent higher year on year.
“We are particularly excited that we grew our loan portfolio by 10 per cent. We made a push to make sure we are more aggressive,” said Noel, who noted that the bank had an optimistic outlook for 2019, based on current macroeconomic conditions.
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